MVNO Karma goes live, selling a 4G hotspot made for sharing

Starting today Karma is asking consumers to engage in a unique social experiment. This new data-only mobile virtual network operator (MVNO) wants you to open your mobile broadband connection to all comers, turning your private 4G wireless modem into a public hotspot anyone can log onto. It sounds crazy, but there are rewards for your altruism: the more data you share the more you receive.

“There is an incentive for good behavior, which is why we’re called Karma,” co-founder Robert Gaal said.

The Wi-Fi connections on all of Karma’s hotspots are open. Whenever the hotspot is on, anyone can latch onto its Wi-Fi signal, where they will encounter a welcome screen offering them 100 MBs of free data. That 100 MBs isn’t subtracted from the hotspot owner’s data bucket though; rather Karma awards the hotspot owner an additional 100 MB for making the connection happen.

A Karma customer could feasibly rack up a nearly unlimited amount of free data by simply leaving the hotspot on and open all day in public areas, though Gaal said in Karma’s beta trials the typical hotspot receives about five guests a week. Karma, however, is hoping that number will increase dramatically as word of mouth spreads and users learn to pick the Your Karma SSIDs from Wi-Fi network lists.

As for guests, they’re free to use that 100 MB in one sitting or spread it over several sessions, each from a different Karma hotspot. Karma tracks data use by tying you back to a Facebook account. Once that 100 MB is used up though, it’s gone. You can either sign up as a Karma customer or bid the service farewell.

Welcome to the social mesh

Karma launched in Amsterdam, but relocated to New York City last year to participate in TechStars and to find the 4G network required to make its shared mobile broadband experiment work. Karma calls its concept “social bandwidth,” but it’s an idea we’re seeing start to gain traction throughout the MVNO community and the wireless industry at large.

FreedomPop, another Clearwire MVNO that just launched, is doling out network capacity on social principles as well, allowing customers to earn and trade megabytes like virtual currency. Ultimately, FreedomPop doesn’t want to sell access, it wants to sell services like VoIP that ride over a free or heavily discounted data connection.

FreedomPop is using those social features largely as a means to attract customers, which is Karma’s goal as well. As people encounter its open hotspots and free bandwidth in public, a portion of them will eventually turn into paying customers, who will in turn seed the country with more open hotspots, which will be used to recruit more customers. And since every Karma account is linked to a Facebook(s fb) profile, Karma is hoping to grow through traditional social networking as well.

But Karma sees social bandwidth as more than just a marketing tool. Rather it’s a more efficient way to deliver mobile data. What’s really revolutionary about Karma is how it’s decoupling the service from the device. It’s possible to be a paying Karma customer without ever owning a hotspot – you just latch onto whatever Karma Wi-Fi signal happens to available at any location.

Of course, buying a hotspot guarantees you’ll have connection rather than depending on chance. But Gaal said not everyone will have their hotspots with them at all times. If Karma can reach a certain scale, it can build a persistent network where enough hotspots are in the wild at any given time that Karma users are almost guaranteed of getting a signal in crowded public places like airports or city squares.

The idea is that devices shouldn’t be designed to connect to specific networks. Instead, they should use the best network connection available. Perhaps the most radical proponent this sort of crowdsourced network is startup Open Garden, which is distributing software that links any device into ad hoc mesh networks. That network then connects to the internet through the fastest and most reliable link.

Open Garden’s approach is social bandwidth taken to its logical conclusion: every device has access to every possible connection and everyone benefits. But Gaal said consumers aren’t quite ready for such a radical approach in networking. They’re too accustomed to the idea that they own their connections to the network, and therefore they need incentive to share them.

“I do believe there is a huge opportunity there but there has to be a way to implement it so it doesn’t cost you,” Gaal said. “Mesh networks are awesome, but if only one person is footing the bill, not so awesome. If there is no value exchanged in the long run, it’s not a sustainable model.”

@Jason. Sure lots of people have 3G or 4G on their phone. But there’s also lots of tablets, Nintendo DS, wifi cameras, laptops, and more that DON’T have any mobile Internet connection. The article looks at ways of getting those online under a social rewards framework.

@Brent. I can appreciate the apprehension about Facebook. Probably partly true. FB would certainly not be able to see the sites you are visiting. it is Karma’s way of simplifying the account creation process, and also getting users to spread the word. The Internet connection is not a FB service.

@Chris. The lines between Clear, Clearwire, and Sprint are blurry. Sprint is a majority owner in Clear, the company that operates the Clearwire WiMAX network, yet Sprint does not have controlling voting shares so the company runs “independently”. Sprint users use Sprint’s WiMAX and also roam freely onto Clear’s. It’s basically the same network to Sprint users, however, when Clear wholesales it to Karma, the deal does not include Sprint’s network. Sprint is currently trying to buy back Clear, but certain Clear shareholders don’t think the price is high enough.

I bought two Frredom Pop mifis which i am giving to my mom and her brother. They are not online enough to need a cable modem and wifi at all times. Is Clearwire the same as Sprint? I thought Freedon Pop was using Sprint’s WiMax network. Speed fir me was low in NYC but great in Boston where they live.

I was at least interested in trying this out until i read that it has to link back to a Facebook account. I would never, ever allow something like this to tie into my Facebook account. Knowing how they work, they (Facebook) would be able to view/track all of your data sent via the hotspot and sell it to their ‘partners’. Aside from that, I would be concerned about infringement – with so many people getting charged with illegal downloads, all the trolling law firms and the blindly compliant courts, i would not risk an open wireless hotspot that can be tied to my name.

the last issue is the amount of data guests get and how they get it. To use the hotspot, guests must have to create an account and then sign in to other hotspots since their usage is tracked. 100mb of data is nothing, gone in 30 seconds. It would have to be an emergency for me to go thru the process of signing up/in to use the hotspot, and a rare emergency at that, one where i didn’t have my cell phone but somehow did have my laptop or tablet.. no, i don’t think this will go anywhere unfortunately.

So many people have hspa+ or lte that it’s rare that someone is without a cellular data connection. On top of that they are usually hotposts (college, work, McDonalds) that offer faster speeds than Clear’s and a larger amount of data than Karma.

Lastly I don’t think 3 or more people would want to share a Wimax mobile hotspot due to their low speeds. I think it’s going to be difficult for Karma to be successful.